from the perhaps-not-such-a-good-business dept

Since late last week, people have been submitting the news that ACS:Law's email archives were revealed and spread widely across the internet late last week. Once again, I find this action somewhat troubling. Like the DDoS attacks that resulted in this leak, I do worry about the backlash that it creates, and I find it a bit shameful that people feel the need to stoop to dirty tricks to try to prove a point or make a statement. I've been debating whether it's worth reporting about the leak at all, or any of what's been found out, and I'll certainly skip over the mundane or merely salacious bits. However, some of the information that's being reported is important in understanding how these "pre-settlement or we'll sue" businesses work, and that's information worth sharing.

ACS:Law, of course, was one of the first, and certainly the most well-known, of the law firms practicing this form of "legal threats as a business model." Since then, however, many other law firms (in Europe and the US) have jumped into the game with much fanfare. ACS:Law's principle, Andrew Crossley, regularly bragged about how profitable his enterprise was, and that certainly was likely some of the thinking behind others trying to get in on the action. However, it appears that, from the data gleaned in the leaked emails, the effort really hasn't been all that profitable.

TorrentFreak has a detailed breakdown showing not only what percentage of people actually responded or paid up to the threat letters, but also what the revenue splits were, and how much everyone made -- covering a period of two years. The results are seen below:

Client

Money Recovered

Paid to Client

Paid to monitoring company

Paid to Firm

Digiprotect

£346,607.90

£151,625.86

£45,060.21

£131,048.38

Topware

£68,127.47

£10,880.48

£10,881.48

£23,551.18

Techland

£22,474.85

£795.93

£590.00

£2,228.43

Reality Pump

£34,866.90

£3519.16

£4,645.28

£7,628.20

Media C.A.T

£164,681.00

£35,350.57

£15,066.06

£55,957.20

Total

£636,758.22

£202,172.00

£76,243.03

£220,413.39

If this truly is an accurate accounting of the money collected and split up, it's really not that impressive. The total amount collected is just a smidgen over $1 million dollars, which means an average of about $500,000 per year. And while it's noteworthy that the law firm ends up with more than the actual copyright holder (funny how that works, huh?), the numbers indicate that Crossley's firm brought in about $350,000 in revenue to his firm over two years -- or about $175,000 per year. It's worth pointing out that Crossley did not appear to work alone, but had at least some staff, so you'd have to reduce that even further -- and you're basically talking about what your average young attorney can make on a job. It's not bad, by any stretch of the imagination, but it's not exactly rolling in the dough. A report from a few years ago about UK starting legal salaries for lawyers fresh out of school put the amount at £63,000 to £65,000 (basically, around $100,000 US), and noted that it was rising quickly. So depending on Crossley's costs for rent, staff and other expenses, it sounds like he might be making a bit over what a recent law school grad can make.

That said, it's also worth pointing out that the biggest copycat firm in the US, which goes by the name US Copyright Group, appears to be sending out a much higher number of letters early on and is asking for noticeably higher fees to "settle," though it's also filing an actual lawsuit (which entails additional costs). ACS:Law, of course, is famous for sending out letters and never actually suing, which helps keep its costs lower.

from the face-the-law dept

Earlier this year, we noted that two lawyers from Davenport Lyons, who were among the first law firms to dive into the mass automated "pay us or we'll sue" pre-settlement letter business with copyright infringement claims, were facing disciplinary action in the UK for those activities. What seemed odd was why the focus was on Davenport Lyons who had apparently gotten out of the game quite a while back. Instead, the work was picked up by ACS:Law who appeared to be using very similar material to what Davenport Lyons had used -- though, I still don't believe anyone has made the direct connection between the two. Still, it seemed odd that ACS:Law was free to continue its campaigns.

Apparently the wheels of the Solicitors Disciplinary Tribunal turns slowly in the UK, but they get there eventually. It's been announced that ACS:Law's Andrew Crossley will now have to face the tribunal (something he's done in the past, though on unrelated issues). Now, when can we expect to see the US versions of this, mainly US Copyright Group, face some sort of disciplinary action in the US?

from the piracy-into-profits? dept

We've seen enough reports of just how lucrative it has been for various law firms to get into the mass automated threat letter business by demanding payment from accused file sharers based on very slight evidence. The only thing that's been surprising, really, is that we haven't seen more law firms jump into the game. In the UK, there was Davenport Lyons, who more or less handed over that business to ACS:Law. Then there was -- briefly -- the UK law firm Tilly Bailey & Irvine, who were called out by a UK Lord as a "new entrant to the hall of infamy." That resulted in TBI backing out of the business. In the US, of course, there was the recent high profile entrance of US Copyright Group (which is really the DC-based law firm Dunlap, Weaver and Grubb) as well as some indications that others are getting into the game as well.

TorrentFreak highlights another UK law firm, Gallant Macmillan, that has decided to join in on the "pay us or we'll sue you" fun. It appears that Gallant Macmillan has gone out of its way to try to indicate it's not "as bad" as those who came before it, but it's still in the same basic business. Of course, the more law firms that start down this road, the more attention the practice will get among politicians -- and the more likely that these sorts of quasi-extortion-like efforts gets shut down both in the UK and the US.

from the let-me-explain-safe-harbors dept

Lots of attention has been paid to Davenport Lyons and ACS:Law as two UK law firms that have sent out thousands of "pre-settlement" threat letters, demanding payment to avoid a lawsuit over copyright infringement. There was a third firm in the UK that briefly popped up trying to do the same thing: Tilly Bailey & Irvine (TBI). A ton of complaints were filed against TBI and even members of the House of Lords in the UK called them the "new entrants to the hall of infamy." After that, TBI "reluctantly agreed" to stop these kinds of campaigns, due to "the amount of adverse publicity" that came with it. Apparently TBI is a big law firm that's been around for nearly two centuries, and it realized that smearing its name this way probably wasn't a good idea.

However, in one post, the blogger behind the site put up a "wanted" poster of a TBI lawyer who had been involved in the pre-settlement letter campaign along with a blog post quite critical of the firm. Rather than go after him directly, TBI is using a bit of third party liability trickery, claiming first that using the image of one of its lawyers in a "wanted poster" is copyright infringement, and secondly, that the nature of the wanted poster was defamatory. TBI claimed that Automattic, the company behind Wordpress.com would be liable for defamation.

Of course, Automattic is a US-based company, and it almost certainly would not be liable under either issue. On the defamation claim, it's clearly protected by Section 230. On the copyright claim... well... just a year ago we wrote about an almost identical situation, with some company execs suing a guy who created "Wanted" posters out of their corporate photos. The company claimed copyright infringement, but the court noted it was fair use. Unfortunately, Automattic accepted the complaint as a DMCA takedown and removed the content to avoid liability. Perhaps the ACSBore owner will file a counternotice and get the image put back up.

TBI is also trying to find out the identity of who is behind the ACSBore blog. Wordpress is standing behind its user on that front, though, saying: "We will not, under any circumstance, disclose any contact/personal/private details of our bloggers without a U.S. Court Order, and this has not been presented to us."

For a company that was worried about its reputation, you would think it would learn that trying to intimidate critics is probably going to backfire badly and give you an even worse reputation than whatever it was you did in the first place. If TBI is really worried about bad publicity, it should ignore the critics -- not try to bully them legally into shutting up.

from the wouldn't-surprise-anyone... dept

Lots of folks have noted the similarities between the UK's ACS:Law and the US Copyright Group (or, perhaps, more accurately Dunlap, Weaver and Grubb, the law firm that appears to be behind USCG). We've pointed out multiple times that ACS:Law and its predecessor Davenport Lyons have been referred for disciplinary action and even UK politicians have called the whole thing a scam. Apparently, Andrew Crossley, who runs ACS:Law has also been sanctioned twice by the Solicitors Regulation Authority in the UK.

But now Robin alerts us to the news that ACS:Law and Crossley are claiming that they're teaming up with US Copyright Group. Or, well, at least we think so. In the grammatically challenged blog post, ACS:Law's anonymous blogger calls it United Copyright Group, so we're assuming that it's a typo:

We are also working in cooperation with a newly-formed organisation, the United Copyright Group, that provides an holistic solution to illegal file sharing and provides a comprehensive set of tools designed to deter and prevent illegal file sharing. More will be written about this new phase of tackling illegal file sharing in due course.

Of course, nothing either firm does has anything whatsoever to do with preventing unauthorized file sharing. It's all about sending threatening letters and getting people to pay up. Either way, this "cooperation" may involve ACS:Law targeting folks in the US via US Copyright Group:

A new joint working relationship with US-based attorneys has opened up the North American region to our clients for identification and pursuit of illegal file sharing of their products.

With this and other operations looking to set up shop in the US, it looks like the courts may soon be flooded with questionable copyright lawsuits of this nature, almost none of which will actually go to court -- but which could freak lots of people into paying large sums of money when they probably don't need to do so. It would be nice if politicians did more than just calling this a scam and sanctioning the lawyers involved in such extortion-like practices. This sort of abuse of the court system for revenue generation should be stopped cold.

from the well,-that's-one-strategy dept

ACS:Law, the UK-based copyright threat letter operation that has been called a "scam" by UK politicians and condemned by ISPs alike, is apparently using a new tactic. The operation, which is apparently being investigated for potential disciplinary action (like Davenport Lyons, whose lawyers have been disciplined for initiating the "pre-settlement" mass letter campaign, and which has some sort of connection with ACS:Law), seems to know that the "evidence" it has isn't enough to actually take anyone to court, so if you reply and deny the infringement, ACS:Law sends you a questionnaire effectively asking you to incriminate yourself.

Of course, there's no legal obligation to reply, just as there's no legal obligation to pay, based on such a "pay up or we'll sue" letter. TorrentFreak notes that, despite all of this, people are still paying, even though not a single case has gone to court. No wonder we have multiple copycat operations showing up in the US. Extortion-like processes are apparently quite profitable. I'm sure that's exactly what the folks who created copyright law in the first place were thinking of in their creation: a system to send out thousands of threat letters demanding payment to avoid a lawsuit. It's all about promoting the "progress" of a few copyright lawyers, you see...

from the keep-digging dept

Just last week, we were talking about how UK firm ACS:Law, who has been condemned by UK politicians and ISPs, was still pushing forward with its efforts to send out tens of thousands of threatening "pre-settlement" letters. These letters attempt to scare recipients into paying up to avoid a potential (though rarely filed) lawsuit claiming copyright infringement, based on quite weak evidence (an IP address collected by DigiProtect after DigiProtect purposely puts a file online). The whole thing has been called a "scam" by Lord Lucas in the UK, and lawyers at the firm that initiated this practice, Davenport Lyons (and who apparently provided ACS:Law with its original documents) were recently referred to a disciplinary committee by the Solicitors Regulation Authority.

The Solicitors Regulation Authority claim that it's also investigating ACS:Law, and they may now have one more thing to investigate. It appears that ACS:Law's latest move is to threaten the US-based blog Slyck.com with a defamation lawsuit, based on some of the comments in Slyck's forums. For a variety of reasons, this threat was entirely groundless. First, it seems that the comments in question were joking statements of opinion, rather than actual libel -- such as calling ACS:Law's plan a "wank plan." How is that libelous?

Second, of course, Slyck is based in New York, and is protected from defamation suits based on comments by its users thanks to Section 230 of the CDA. Furthermore, Slyck has even greater protections thanks to New York's own anti-libel tourism statute, the Libel Terrorism Protection Act, which makes libel lawsuits in foreign countries against US journalists unenforceable. The good folks at the EFF have stepped up to support Slyck in responding to ACS:Law, and it appears that, for the time being, ACS:Law has gone quiet.

Of course, in theory, ACS:Law could push forward against Slyck anyway, and could potentially win in the UK. But given the mass scorn being heaped upon ACS:Law right now in the UK, combined with a recent push in the UK to rewrite defamation laws to prevent these sorts of questionable lawsuits, if ACS:Law does decide to push forward, it may find that the backlash is a lot more damaging than some anonymous person in a forum calling its plan a wank plan.

from the not-bullying? dept

Just as Davenport Lyons lawyers are being sent for disciplinary action over the firm's practice of sending large numbers of "pay up or we sue" pre-settlement letters, ACS:Law, the shady firm that effectively spun out of Davenport Lyons to do the same thing is ramping up its efforts. This isn't a huge surprise. Late last year, the firm said it was preparing to send out 30,000 letters, despite numerous studies showing that these letters regularly target innocent people, but scare many people into just paying to avoid a lawsuit.

"Neither we nor our clients threaten or bully anyone. We send out letters of claim to account holders of internet connections where those internet connections have been identified as being utilised for illegal file-sharing of our clients' copyrighted works.... Our letter makes an enquiry in that regard and invites the recipient of our letter to respond to this evidence. In addition they are invited to enter into a compromise to avoid litigation,"

This is disingenuous in almost every possible way. Sending a legal letter saying that you've been caught breaking the law, and likely will be taken to court (even though ACS:Law almost never seems to actually follow through on that threat), is absolutely a threat. And notice how he calls it "an enquiry," which is again misleading. It's an accusation, and a typical shakedown offer. It's not a "compromise," and it's not an afterthought as presented in the quote above. It's the key point of the letter, and the entirety of the business model put forth by the companies involved, who describe it as a way to "profit" from people sharing their content.

In responding to the fact that even the record labels (via BPI) have condemned these letters, the guy from ACS:Law responds with more ridiculousness:

"I think the BPI is letting its members down. I think they are scared of alienating their customers. My clients don't have the same fear. They take the view that the people they target aren't their customers because they are stealing from them."

Of course, if they were "stealing" from his clients, then it's a criminal, not a civil, matter, and as he must know, the proper response is to go to the police. Not demand they pay up via some sort of shakedown letter.

Finally, the guy from ACS:Law basically admits that he's the one getting rich off of this, noting that he gets more money from this than the copyright holders:

"After my expenses the copyright owner is the largest single beneficiary."

Nice little trick there with the "after my expenses." This is a classic shakedown with a weak attempt at giving it legitimacy by using copyright law as a cover.

from the hammer-coming-down dept

With more and more attention being paid to the efforts by firms like ACS:Law and DigiProtect to profit from blasting out hundreds of thousands of letters demanding payment to avoid file sharing lawsuits (which almost never seem to actually get filed), it seems that the companies involved in such things may finally be facing some pretty serious criticism that could force them to curb the practice. First up, politicians. A few different UK officials are coming out loudly against ACS:Law, with some even suggesting that the firm's efforts are like a "scam" or "legal blackmail."

Meanwhile perhaps the most surprising of all is that BPI, the UK's version of the RIAA has also come out against the practice, saying that they don't feel it is appropriate. Perhaps it's not a huge surprise -- given that the clients of ACS:Law/DigiProtect have tended to be video game and porn producers rather than the recording industry. However, when even the recording industry finds your actions against file sharing too draconian, it suggests you've really stepped over the line. At some point, you get the feeling that ACS:Law is going to get slapped down legally.

from the borderline-extortion dept

We've already discussed how operations like DigiProtect and ACS:Law are operating a rather questionable business of purposely putting content online, tracking the IP addresses of anyone who downloads that content, and then sending letters demanding payment to avoid a lawsuit. While it's not clear if any of these lawsuits are ever filed, many people are frightened into just paying up, even if they've done nothing wrong. And, in fact, it appears that many innocent users are receiving these letters, in such a blanket campaign. While some may call it "collateral damage" if a small percentage of innocent people receive these letters, it's still quite problematic, and a highly questionable business practice.